Hundreds of thousands of Dutch families will find themselves in financial difficulties in the near future if they lose their favourable mortgage interest rates and are faced with a raft of government cuts.

The warning comes from Dynamic Credit, the agency that sounded the alarm in the summer of 2008 on toxic mortgages in the US. These mortgages lay at the heart of the credit crisis of later that same year.
‘There are now so many things going on,’ Tonko Gast, director of Dynamic Credit, told the Financieele Dagblad. ‘Interest rate changes, increasing unemployment, a failing economy. Consumer debt will not be too bad in 2011 but 2012 will be another story.’
Overstretched
The financial services sector watchdog AFM warned back in 2009 that 430,000 households were overstretched and barely able to pay their mortgages.
It announced plans to ban 100% plus mortgages but was heavily criticised by the home owners’ association and the finance ministry. The plans were dropped.
Now Dynamic Credit’s research shows that 300,000 households are badly overstretched. ‘Mortgages from 2005 to 2007 will become vulnerable now the economic climate has worsened,’ Gast told the paper.
Gast says these mortgages can be classed as sub-prime and will affect incomes of around €35,000 per annum.
On Tuesday the fund behind the national mortgage guarantee (NHG) warned that if house prices drop further, the fund’s buffer will not be adequate.